Arun Jaitley says govt not averse to making donations to political parties fully digital

Hinting at another major policy change to rein in black money in politics, Union Finance Minister Arun Jaitley, on Saturday said that the government has no objection in mandating digital payments for donations made to political parties.

Speaking to CNBC Awaaz in an exclusive interview, Jaitley said that if the Election Commission suggests, the centre is open to introducing a law, which will completely abolish donations made in cash to all political parties.

Jaitley's statement comes in the backdrop of Union Budget's proposal that restricts anonymous cash donations to a political party to Rs 2,000 as opposed — a sharp drop from the Rs 20,000 limit earlier.

Union Finance Minister Arun Jaitley. PTI

On 1 February, presenting the Union Budget for 2017-18, Jaitley had said that any anonymous cash donation to a political party will now be limited to Rs 2,000 and that political parties would now have to take all donations above Rs 2,000 through cheque and digital payments.

Further, the Union Budget also provisioned for the Reserve Bank of India (RBI) to issue bearer bonds that a donor may buy through cheques and digital payments. The donor can then give the bond to a political party which must deposit it within a month in a pre-determined account.

According to CHRI, the RBI Act is sought to be amended to allow for the issuance of electoral bonds that individuals and companies can buy through commercial banks.

"The import of the amendments proposed to the RP Act, 1951 is that political parties will not be required to disclose the identity of individuals and companies who make donations through electoral bonds bought from the commercial banks," said Venkatesh Nayak, programme coordinator, CHRI.

According to CHRI, if approved by Parliament, the combined effect of the amendments to the RBI Act, the IT Act and the Representation of the People Act would be:

"Many political parties are likely to strive to receive cash donations below Rs 2,000 only. According to Section 29C of the Representation of the People Act, which applies to donations of Rs. 20,000 or above only, these will not be required to be reported to the IT Department or to the Election Commission of India," said Nayak.

However, many had taken the government's apparent move to curtail black money in elections, with a pinch of salt.

The Association for Democratic Reforms had said that the Union Budget failed to address the issues of transparency, disclosure and penalties of political parties, claiming that the proposals on political funding reforms fell short of the recommendations by the Election Commission and the Law Commission.

Commenting on the budget presented by Finance Minister Arun Jaitley, the ADR also found flaws in the proposal of lowering the limit for anonymous cash donations from Rs 20,000 to Rs 2,000.

"The budget does not propose that the details of all donors who donate above Rs 2,000 be made available to the Income Tax department and/or an external body auditing the accounts of political parties," it said.

"Unless complete information is available for audit scrutiny, the sources of donations below Rs 20,000 to political parties will continue to stay hidden," it contended.

However, the finance minister's fresh statement could ease such qualms about the provisions of the Budget.

Speaking on the issue of GST, Jaitley expressed hope that the GST bill could be passed in the Budget session. He also added that boosting the private sector, which is reeling under the effect of demonetisation is another major challenge in front of the government.

Jaitley also hinted that the government could be mulling to introduce a universal basic income scheme for the poor to ensure income surety and empowerment of the poor.

Jaitley justified his decision to rollback tax rebates on buying of second property, stating that those who can afford two homes can certainly afford to pay taxes. He said the country's budget should be made keeping in view the poor and the needy, rather than the affluent class.